View more on these topics

Insurance Review: Driving it home

Berry-Steve-2016

Asking clients how their family would find £2,000 per month if catastrophe struck may highlight the importance of life cover

Life insurance is the most widely known and bought protection product, yet so many people are still without it. Recent research from Scottish Widows found 50 per cent of the UK’s mortgage holders have no life cover in place, meaning 8.2 million people are leaving themselves and their families financially exposed.

For those with a partner, children or someone that depends on them for help or income then a life insurance policy should be seriously considered. In times of trouble, it provides cash where none existed before. Life cover itself is pretty simple but it still comes with a range of options that enables it to be tailored to individual needs.

Insurance is taken out for a number of reasons. Firstly, the purpose of protecting a family’s main asset: their home. If death occurs, the mortgage can be paid off in full and the remaining spouse and children can continue to live in the property.

Secondly, as well as ensuring the house is fully paid for, the remaining spouse and children will need money for every day living expenses. Family protection, if taken, can provide a lump sum or regular income.

Often clients that have mortgage protection in place feel that, since the mortgage will be paid off if they die, no other kind of protection is needed. They could not be more wrong. As an old boss of mine used to say: “So the mortgage is paid off, now what are you going to eat? Bricks?”

When talking to clients, it is crucial to ask them questions that will make them realise they do not have enough protection in place for their family. For example:

  • If you died tonight how will your family survive financially?
  • How much income would they have next month?
  • Is it enough for them to survive?
  • Where is this income going to come from?

Questions like this should hopefully prompt them to re-assess their needs and the level of protection they currently have in place. But while people may be aware they need life cover, you will often hear excuses such as “I can’t afford the solution you are recommending” or “it’s not for me right now as I’m purchasing a new car so finances are tight”.

The answer to this is simple. If you cannot find a £25 monthly contribution to a contingency fund to guarantee cash for your family in the event of your death, how will your family find more than £2,000 per month if something happened to you?

Recent claims from the Association of British Insurers and Group Risk Development show that more than £5bn was paid last year in group and individual protection insurance claims: the equivalent of almost £14m a day.

The saying goes that in this life there are no certainties except for death and taxes. With this in mind, it is vital to ensure that everything you own – including your most valuable asset, your life – is protected.

BESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswy

Steve Berry is protection manager at Pink

Recommended

Board-Room-Meeting-Room-Business-700.png

Bank bosses lined up to lead new trade body

A new lending trade body has been set up and appointed its board following votes from existing trade associations to merge. Last week a company called Newta Limited was set up, according to Companies House documents. ‘Newta’ stands for ‘new trade association’ and is not a permanent name, according to a spokesman. The company’s officers […]

LendInvest halts second charge lending

LendInvest has paused second charge lending due to Brexit uncertainty. The lender says it will honour its existing pipeline of deals, and that no cases have been dropped or cancelled due to Brexit. LendInvest director Ian Thomas says: “Our message today is that LendInvest remains very much open for business. “Our decision to tighten lending […]

TSB store front 700 x 450

TSB to increase BTL interest covers to 145%

TSB is increasing its buy-to-let interest coverage ratio from 125 per cent to 145 per cent. For loans up to 65 per cent LTV, TSB will charge 145 per cent of five per cent, or pay rate, whichever is highest. For mortgages from 65.1 to 75 per cent LTV, TSB will require 145 per cent […]

Thumbnail

Case study: administration — implementing a management log

Our client is a leading video game and publishing company best known for its console role-playing game franchises. The client provides a number of benefits, at varying levels and cost that attract a P11d liability. With the absence of a management log to track data for benefit movements, enormous administrative and therefore cost implications were occurring each year just to comply with P11d reporting requirements.

In Focus Ebola cover - thumbnail

White paper — In Focus: Ebola Virus Disease

Jelf Employee Benefits focuses on Ebola Virus Disease (EVD) and what this means for businesses with operations in West Africa. This will be of particular interest to those with employees either travelling to, or living within, West Africa, the area affected by the most catastrophic outbreak of Ebola to date.

Newsletter

News and expert analysis straight to your inbox

Sign up